Sun Setting on Sky-High Solar Prices

If the high installation cost of solar photovoltaics (PV) has been the one thing preventing it from being a completely viable clean-energy alternative, the industry may finally be over that barrier.

According to a recent study released by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory, the installed price of PV systems in the United States fell substantially in 2011 and through the first half of 2012.

The study, “Tracking the Sun V: An Historical Summary of the Installed Price of Photovoltaics in the United States from 1998 to 2011,” examines more than 150,000 residential, commercial and utility-­sector PV systems installed between 1998 and 2011 across 27 states. That sample represents roughly 76 percent of all U.S. grid-connected PV capacity installed.

The study’s findings indicate that the median installed price of residential and commercial PV systems completed in 2011 fell by roughly 11 to 14 percent from the year before. The declines varied depending on the size of the system and its location. For example, the costs of systems installed in California fell by an additional 3 to 7 percent within the first six months of 2012.

The report also highlights the different trajectory of price declines for nonmodule costs, such as installation labor, marketing, overhead, inverters and the balance of systems, as compared to the decline in prices for the modules themselves. According to the report, nonmodule costs have declined by roughly 30 percent from 1998 to 2011. However, these figures are somewhat deceiving, as the decline for nonmodule costs has not been as great as it has been for module costs. Consequently, the price of nonmodule costs represents the portion of the total cost for solar where the greatest reductions can still be made.

According to the report, the median price of PV systems installed in 2011 ranged from $6.10 per watt for the smallest systems (residential and consumer systems smaller than 1 kilowatts) to $3.40 per watt for utility-sector PV systems larger than 2,000 kW.

The study suggests that the greatest potential for further cost reductions could be through large-scale deployment programs because solar represents significant economies of scale.